The below article by Cole Latimer in today’s ‘Age’ highlights the likelihood of gas prices remaining high, with projections of $12.60 per gigajoule next year, up from $3.48 for the March quarter, 2015.
Gas prices have doubled since 2015. If they rise to the projected $12.60 point that’s a 362% increase.
Wind and solar targets push prices up: renewable energy targets and their associated subsidies are designed to increase the proportion of electricity generated by wind and solar. The problem is, the intermittency of wind requires gas or battery back up. Solar output peaks between the morning and evening demand peaks, requiring more gas use at a time of skyrocketing gas prices, resulting in higher wholesale electricity prices.
The wholesale electricity price has risen on the back of rising gas prices.
The article goes on to highlight the impending gas shortage in Victoria, expected to hit around 2022, just as new wind farm capacity of 1200MW comes online, exacerbating intermittency and dependence on gas.
A solution being pursued by the likes of ExxonMobil is to set up new gas import terminals and drill for new gas reserves of the coast of Victoria.
The problem is, analysts do not expect these new supplies to bring down domestic prices.
This means electricity prices will remain high.
Increased wind and solar deployment coupled with the closure of Hazelwood power station and bans on gas development have resulted in decreased affordability and reliability for gas and electricity users alike.
Ironically, the solutions being pursued by the Victorian state government involve more wind, solar and (high-priced) gas.
Unfortunately, this won’t help businesses reliant on utility-scale process heat. Many of these businesses switched to natural gas when the price was around $4 per gigajoule. The price has doubled and is set to triple, threatening viability and jobs. Some businesses are fortunate enough to be able to access biomass such as woodchips, but supply is limited and variable.
Wind and solar can’t produce affordable, reliable utility-scale heat.
This has presented ECT with a local market opportunity to supply Coldry solid fuel from its high volume test facility.
We recently announced our first deal worth $1.3 million over 5 years to provide a turnkey ‘process steam’ solution to a Victorian customer.
With no solution to the high gas price in sight and the very real threat of job losses across a range of primary industries, we believe our Coldry process can step in to restore energy affordability and reliability to this important market segment.
Gas import terminals ‘inevitable’ but won’t lower prices, say analysts
5 Oct 2018 | The Age | Cole Latimer
Rising gas demand will make Australia a gas importer for the first time in its history but major gas users are likely to see little respite from high prices.